If corporate-style accounting standards were used, the federal governments debt for last year would be $1.3 trillion instead of the official $248 billion deficit reported.
The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss is equal to $11,434 per household. This is more than Americans paid in income taxes in 2006.
Modern accounting requires that corporations, state governments and local governments account for expenses immediately when a transaction occurs. This is even if the payment would be made later.
The federal government, however, does not follow the rule. Consequently, promises for Social Security and Medicare do not show up when the government reports its financial condition.
The bottom line would show that to days taxpayer is on the books for a record $59.1 trillion in liabilities. This amount is equal to $516,348 for every United States household. In comparison, the average United States household owes an average debt for mortgages, car loans, credit cards and all other debt, combined, of $112, 043.
Congresses unfounded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities. State and local government retirement plans account for much of the rest.
This hidden debt is the amount taxpayers would have to pay immediately to cover the governments' financial obligations. Like a mortgage, it will cost more to repay the debt over time. It is estimated that every United States household would have to pay about $31,000 a year for 75 years to pay off this hidden debt.
The Financial Accounting Standards Advisory Board, which sets federal accounting standards, is considering requiring the government to adopt accounting rules similar to those for corporations. The change would move Social Security and Medicare onto the government's income statement and balance sheet, instead of keeping them separate.
Traditionally, those in Washington have opposed accounting for these programs as the Financial Accounting Standards Advisory Board has recommended. Their argument is that these programs can be cut or cancelled by congress and therefore are not true liabilities.
